Recently, I’m finding that I’m working with more and more startups. This is exciting - to get an early glimpse at tomorrow’s industries and products. It’s also rewarding in that it shows that today’s startups (as opposed to their extinct Web 1.0 ancestors) are consciously leveraging the proven body of management theory in savvy new ways.
I took classes for my USC MBA at Manchester Business School (MBS) in the UK in the early 90′s. One of the lessons that I still carry with me from that time is that companies, as they grow, face a series of challenges that they must overcome if they are to continue to grow. There are various models that represent this idea, but the basic concept is easy. As a startup passes the 80 - 120 employees mark, the original, light-weight and informal communications channels break down - badly.
To make the successful transition to the next stage of growth, companies need to formalize management, communications and processes. The tribal knowledge that worked so well last year, no longer works when more and more new people are added.
Getting ahead of the curve
What I’ve found rewarding with the companies I’ve worked with is that they are starting on their processes as well as their reporting and organization.
My grandmother used to say “a place for everything and everything in it’s place.” I have the same recommendation for startups as they start to try to document processes. Start with a structured, proven, researched based framework that you can grow into. That is, start with the APQC PCF. This will give you a framework to grow into as you go through through the next inflexion points of autonomy crisis, control crisis, red-tape crisis and growth crisis.
It will also make you a more desirable acquisition if you want to go that way…
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Hi Tom,
I’m currently working with a number of startups going through growing pains and have experienced it first hand myself. So far the challenges have been different every time but I do agree that some sort of organization is required, that’s why I’m involved.
It’s interesting the range of approaches from those that focus on the structure of the company and forget about their product to those that can only think about their product. I’ve found that getting these people to think in terms of process useful but it has to be balanced, they must not lose sight of their main purpose, they must always be focused on their goals sacrificing structure if necessary.
Craig, thanks for the thoughtful comment. It sounds like you’ve seen a lot of the challenges lately. I agree that there has to be a balance in the approach taken.
That said, many people have observed that the communications and just general way of working in a 80 person company starts to seriously break down when the size grows past 120. Many reasons for this - it becomes increasingly hard to know what everybody is doing as size grows, new starters come on without the years of company experience that the original employees have, etc. The challenge is to start to put in management without being too heavy handed. Process is clearly part of this. Done right, process can also be the foundation for a new way to communicate and collaborate.
I think teeing things up for future growth with a proven structure like the APQC PCF (vs. roll your own process structure) is a great start.
Tom, think you highlight an important point. Although from my experience most start-ups that don’t take roles, policies and processes very early on slow down already when they reach 20-30 employees. This is the point where daily operations steal most of the founder’s time.
Best,
Søren Pommer
Thanks Soren. I think you’re right - different companies will hit the crisis at different employee numbers. The advantage that startups have is that they can be greenfield sites and do things right (as well as use current best practice) right from the start.
That’s one of the beautiful things about the PCF - that it can scale. If you’re not ready for the depth involved in managing by process, just bring the PCF on to help manage your operational content. It’s easy, and free. When you’re ready to grow, use it as the basis for your own process modeling and definition efforts. It can even serve as a rudimentary org chart for some organizations.
John,
Thanks for the reply - I forgot to mention that great selling point for the APQC PCF - it’s free! One of the other things that I didn’t mention, but really like about the PCF is it let’s people find process. This can be very hard in many organizations, and the PCF provides an intuitive way to find the appropriate process in a few clicks.
Great article.
I’ve found that starts ups and small businesses, tend to feel that processes are not needed and are something that large companies use. And something that slows large companies down. Being small provides the advantage of being nimble and you cant do that with process is the believe a lot of times.
I believe that process implementation done properly, actually is a huge benefit to a small business or startup. When your small is precisely the time to implement processes.
It keeps your business fluid and synchronized. When dealing with outsourcing and remote staff, the obstacles are minimized by consistent process.
Question, what are your feelings on smaller companies benefiting from processes?